FreedomWorks - Ponzi schemehttp://www.freedomworks.org/fieldtags/ponzi-scheme
enCNN Rates Perry’s “Ponzi Scheme” Remark False Because Social Security Isn’t Illegal http://www.freedomworks.org/content/cnn-rates-perry%E2%80%99s-%E2%80%9Cponzi-scheme%E2%80%9D-remark-false-because-social-security-isn%E2%80%99t-illegal
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>CNN’s best attempt to discredit Presidential candidate Rick Perry’s statement that Social Security is a Ponzi Scheme relies on a legal definition by the Securities and Exchange Commission. <a href="http://www.cnn.com/2011/POLITICS/09/12/truth.squad.social.security/index.html?hpt=hp_c2">Seriously</a>:</p>
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<blockquote><p>“the Securities and Exchange Commission defines such a scheme as ‘an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors...Social Security is not a fraudulent criminal enterprise designed only to benefit current participants in the program. It is a legitimate government program meant to serve both current and future generations of retirees.”</p>
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<p>CNN’s position depends on the subtle distinction between a “de jure” (by law) and “de facto” (by fact) operation, a difference which matters little to those getting fleeced. So yes, CNN, the IRS taking money from me to pay for Social Security is not technically a Ponzi Scheme because Ponzi Schemes are illegal and the government made Social Security legal. But I care much more that the program operates like a de facto Ponzi Scheme.</p>
<p>Even when CNN admits that it “is true that benefits to current Social Security recipients are paid for in part by new members of the workforce”, they cannot comprehend how that makes Social Security operate like a Ponzi Scheme. Using the phrase, it seems, just doesn’t make for polite political discourse at CNN. </p>
<p>But Perry calling Social Security a Ponzi Scheme is not some new Tea Party rhetoric, it’s been a term used to describe the program for decades. <strong>The term Ponzi Scheme was actually used as the justification for Social Security</strong> by a liberal, Nobel prize-winning economist, named by <em>The New York Times</em> as "the foremost academic economist of the 20th century" (Jonathan Last has more on this <a href="http://jonathanlast.com/2011/09/08/is-social-security-a-ponzi-scheme/">here</a>):</p>
<blockquote><p>"Social Security is squarely based on what has been called the eighth wonder of the world - compound interest. A growing nation is the greatest Ponzi game ever contrived. And that is a fact, not a paradox." - Nobel prize-winning economist Paul Samuelson, 1976 </p>
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<p><strong>But our nation is growing older.</strong></p>
<p>As Staff Writer Julie Borowski <a href="http://www.freedomworks.org/blog/jborowski/social-security-is-a-mandatory-ponzi-scheme">notes</a>, reliance on new workers to pay for existing benefits to seniors is the one of the main reasons I am not free to opt-out of a system I did not consent to save my money for me. Social Security needs me and millions of young people like me to prop up a broken system paying out to an aging population. This doesn’t worry CNN:</p>
<p><img src="http://d7.freedomworks.org.s3.amazonaws.com/SSPonziScheme_1.png" alt="Social Security Fail" title="Social Security Fail" class="imagecache imagecache-full" /></p>
<p>But this is not just about whether, under some definition, you could describe the activities of Social Security as being like a Ponzi Scheme. The bigger question should be why is a news outlet determining what defines “a legitimate government program”? When Dennis Kucinich got down on the House floor and <a href="http://www.wagingpeace.org/articles/2003/04/01_kucinich_end-house-war.htm">decried the war in Iraq as illegal</a> should CNN have responded by saying he’s wrong because the government made it legal? </p>
<p>Of course not. A healthy Republic depends upon citizens challenging the positions of our government. CNN’s unwillingness to challenge the government on Social Security is troublesome, but for their position on Perry maybe CNN should pull out Webster's Dictionary and look up "intellectually dishonest".</p>
<p><strong>UPDATE:</strong> Michael Tanner, senior fellow at the Cato Institute, <a href="http://www.cato.org/pub_display.php?pub_id=13625">has a blog post up today</a> defending Rick Perry. The post has also appeared on <a href="http://www.nationalreview.com/articles/275908/yes-it-ponzi-scheme-michael-tanner">National Review Online</a>:</p>
<blockquote><p>Of course, Social Security and Ponzi schemes are not perfectly analogous. Ponzi, after all, had to rely on what people were willing to voluntarily invest with him. Once he couldn't convince enough new investors to join his scheme, it collapsed. Social Security, on the other hand, can rely on the power of the government to tax. As the shrinking number of workers paying into the system makes it harder to continue to sustain benefits, the government can just force young people to pay even more into the system.</p>
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<p>Social Security is facing more than $20 trillion in unfunded future liabilities. Raising taxes and cutting benefits enough to keep the program limping along will obviously mean an ever-worsening deal for younger workers. They will be forced to pay more and get less.</p>
<p>Rick Perry got this one right.</p>
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</div></div></div>Tue, 13 Sep 2011 15:12:16 +0000mduncan55016 at http://www.freedomworks.orghttp://www.freedomworks.org/content/cnn-rates-perry%E2%80%99s-%E2%80%9Cponzi-scheme%E2%80%9D-remark-false-because-social-security-isn%E2%80%99t-illegal#commentsSocial Security is a Mandatory Ponzi Scheme http://www.freedomworks.org/content/social-security-mandatory-ponzi-scheme
<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p>Rick Perry made headlines for calling Social Security a “Ponzi scheme” in last night’s presidential debate. Mitt Romney and statist media sources predictably attacked this position claiming that the insolvent program is A-Okay. To be fair, Rick Perry isn’t the only Republican candidate with the courage to speak truth to fiction about Social Security. Ron Paul has likely been <a href="http://www.lewrockwell.com/paul/paul215.html">calling</a> the entitlement program a Ponzi scheme long before I was even born. It’s suddenly become popular to call Social Security out for what it really is: a compulsory Ponzi scheme.<br /><br />Social Security is the definition of a Ponzi scheme with a few notable differences. Charles Ponzi started a <a href="http://www.nationalreview.com/articles/275908/yes-it-ponzi-scheme-michael-tanner#.TmFL052Sil8.facebook">money making scam</a> that would later be known as a Ponzi scheme back in 1916. He persuaded people to allow him to invest their money but he never made one investment. He simply transferred money from his later investors to his earlier investors. The unsustainable system inevitably collapsed. Charles Ponzi was then convicted of fraud and spent years behind bars. <br /><br />Social Security has many similarities to a Ponzi scheme but it’s even worse. The main difference is that Ponzi schemes are voluntary and Social Security is mandatory. Everyone is forced to pay Social Security payroll taxes whether they want to be part of the system or not. Just like Charles Ponzi’s fraudulent scheme, money from “later investors” or young workers is transferred to “earlier investors” or retirees. <br /><br />Ponzi schemes are always great for earlier investors but rip off those who invest later on. The number of retirees is growing far faster than the number of new workers. The <a href="http://www.ncpa.org/pub/st247?pg=4">ratio of workers</a> to retirees has grown from 42 to 1 in 1940 to just 3.3 to 1 today. Social Security is facing more than <a href="http://www.nationalreview.com/articles/275908/yes-it-ponzi-scheme-michael-tanner#.TmFL052Sil8.facebook">$20 trillion</a> in unfunded future liabilities. Young people actually believe that they have a <a href="http://articles.chicagotribune.com/1994-09-27/news/9409270092_1_personal-retirement-account-ufos-social-security-administration">better chance</a> of seeing UFOs than a Social Security check made out to them when they retire. <br /><br />Some people especially those on the left wrongly call us “cruel.” But think about it: how cruel is it to force a young person who believes they will get nothing in return into a system? Why should young workers who are just starting out in their careers be forced to pay for the Social Security benefits of elderly millionaires and billionaires? Seniors are much <a href="http://www.stateline.org/live/details/story?contentId=94035">wealthier</a> than young people on average. <br /><br />Individuals should be free to opt-out of Social Security if they wish. People could then stay in the insolvent Social Security system or invest on their own. If Social Security is so "great", why is it mandatory? Private sector retirement plans can provide safer plans with higher benefits than Social Security. Unlike Social Security, the assets in the private retirement plans can be rolled over to a surviving spouse or other family member. We need more retirement choices instead of being forced into a terribly mismanaged government monopoly.</p>
<p><img src="http://d7.freedomworks.org.s3.amazonaws.com/Ponzi.png" alt="Ponzi scheme" title="Ponzi scheme" style="display: block; margin-left: auto; margin-right: auto;" class="imagecache imagecache-full" /></p>
<p>The <a href="http://www.nationalreview.com/corner/275898/ponzi-scheme-vs-social-security-veronique-de-rugy">Venn diagram</a> above made by The Examiner’s Tim Carney shows the difference between Ponzi schemes and Social Security. Bernie Madoff, who was responsible for the largest Ponzi schemes in history, was sentenced to <a href="http://money.cnn.com/2009/06/29/news/economy/madoff_prison_sentence/index.htm">150 years </a>in prison back in 2009. But the federal government’s Social Security scheme is somehow mandatory. Politicians who criticize Social Security are indeed considered pariahs. <em>Think Progress</em> says that it is “<a href="http://thinkprogress.org/yglesias/2011/09/08/314095/social-security-is-no-more-a-ponzi-scheme-than-is-anything-else-that-relies-on-future-economic-growth/">nuts</a>” to even compare Ponzi schemes and Social Security.<br /><br />The Social Security scam disproportionally hurts the working class and African Americans. Tim Carney <a href="http://www.nationalreview.com/corner/275898/ponzi-scheme-vs-social-security-veronique-de-rugy">says</a> that, “given that black men have a lower life expectancy, they get shortchanged on the benefits end.” The life expectancy for an African American male is just <a href="http://minorityhealth.hhs.gov/templates/content.aspx?ID=3733">69.7 years</a>—versus 75.5 years for white men. The Social Security retirement age is 65. This means that close to half of African Americans males will die before every receiving a dime of Social Security benefits despite paying into the system all of their working life. How is <em>that</em> for cruel? <br /><br />Social Security is a compulsory Ponzi scheme. As Cato Institute scholar Roger Pilon <a href="http://www.cato-at-liberty.org/rick-perrys-moment/">says</a>, “a private company that ran such a scheme would be prosecuted in less than a New York minute.” Social Security is a hopelessly bad deal for today’s worker. Americans should be allowed to invest in their retirement as they see fit—not be forced into a mandatory Ponzi scheme against their will. We need more presidential candidates with the guts to propose allowing individuals to opt-out of Social Security.</p>
</div></div></div>Thu, 08 Sep 2011 20:36:06 +0000JBorowski55011 at http://www.freedomworks.orghttp://www.freedomworks.org/content/social-security-mandatory-ponzi-scheme#comments